Surly Curmudgeon

The human race divides politically into those who want people to be controlled and those who have no such desire. The former are idealists acting from highest motives for the greatest good of the greatest number. The latter are surly curmudgeons, suspicious and lacking in altruism. But they are more comfortable neighbors than the other sort. -- Robert A. Heinlein

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Location

Somewhere in the crusty outer layer of small towns surrounding the warm creamy center that is Oklahoma City.

People are not happy about this latest round of gas price increases; and, not surprisingly, they are demanding answers ó and "solutions" ó from the wrong people: the political classes. At the cutting edge is Hawaii, where gas prices will soon be controlled by law, not markets.

Hawaiians are about to find out in the near future that the "solutions" they have supported are going to have the opposite effect of what supposedly was intended.

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All of this brings us back to Hawaii's pricing scheme, but one must keep something in mind. This was pretty much the same policy that the U.S. government followed back in the 1970s when it controlled prices at domestic wellheads, and at the pump. Any reader who was driving a car during that decade can remember the chaos that incurred, especially whenever there was turmoil overseas.

The government's logic went like this: if we keep the price at the wellhead low, then the savings will be passed on to consumers. However, by placing price controls on crude oil, the government managed to do two things. First, it created shortages of crude oil, as producers saw no incentive to take many risks to drill for more oil. (Yes, the government claimed it had "incentives" built into its policies, but these were the usual byzantine sets of bureaucratic incentives that had no basis in economic reality.) Second, it drove producers to purchase the more available crude oil that was made available from the Middle East. For all of the talk of "dependence" upon "foreign oil," government policies were the driving force in encouraging oil companies to look overseas for supplies of crude.

The market is a problem-solving mechanism. Government is a straightjacket-creating mechanism. When you apply the latter to the former, you get less problems solved and more people bound up in knots.

Friday, August 26, 2005

Clayton Cramer has posted something which bears pondering. I haven't been able to resolve this issue in my head in 3 years of trying, and it's one of the heartbreaking things about purely theoretical libertarianism. None of the issues raised by any of my opponents have ever given me much pause, but this is an issue that just seems to defy easy answers. Or maybe I'm just not thinking hard enough.

Brigitte Bardot, the 1950s and 1960s film star turned animal rights campaigner, has called on the French government to halt the reported use by fishermen on the island of Reunion of live puppies and kittens as shark bait.

"It is imperative that the government does something to end this practice," she said in a letter to the minister for French overseas territories, Francois Baroin, a copy of which was given to AFP Thursday.

According to Clicanoo, a newspaper in Reunion, a French island located in the Indian Ocean, a six-month-old puppy was found last month with hooks implanted in its snout and one of its legs.

The French Society for the Protection of Animals (SPA) told the daily the dog was the victim of cruel fishermen who attract sharks by throwing puppies or kittens into the water, tied to fishing lines, and wait for the predators to swallow the thrashing animals.

This is one of the reasons that I am a conservative, not a libertarian. It may be your property but there are some actions too cruel to allow. Even a cat or a dog can recognize that it is about to be mauled to death. Most state ban cockfighting, and that's an animal with far less awareness.

Apparently the Tennessee Attorney General has taken to harassing entertainers for using tobacco on stage. Obviously AG Summers needs to take up golf or tiddlywinks or something, because he's not doing society any favors by wasting taxpayer money on crap like this. If Gretchen Wilson wants to ruin her smile with rotten gums and horrendous dental bills, that's her business.

Tuesday, August 23, 2005

Of course, all speculators render a useful service by conveying the marketís evaluation of scarcity. Their activity also evens out price movements over time: in the case of oil, they buy now, when prices are lower (in their expectations), in order to sell later, which will bring future prices down. As usual, greed is useful. To repeat what two Cato economists wrote about the oil industry, letím gouge!

From an economic point of view, higher oil ó and oil product ó prices are not a problem. They convey useful information about the perceived scarcity of the resource. Owners of oil fields and other oil assets get rents, but this is simply a transfer with no special economic significance.

To summarize, oil prices have recently increased because of supply disruptions, and because market participants believe that the resource is becoming scarcer. Crude oil could be scarcer in the future for a number of reasons: the political situation in the Middle East and the cost of developing new supplies (like oil sands), on the supply side; increases in demand, caused by Chinese and Indian growth, on the demand side.

The article goes on to explain why this is not necessarily cause for alarm, even though everyone seems to be panicking over it:

Until his death in 1997, economist Julian Simon predicted a continuous decline in resource prices. In 1980, he made a famous bet with environmentalist Paul Ehrlich. Simonís bet was that a $1,000 basket of any five metals chosen by Ehrlich would be worth less (in constant dollars) 10 years later. Ehrlich lost. In 1990, the value of the basket at current market prices was down more than 50%. Ehrlich had to send a $576.07 check to Simon, representing the drop in the basket value. In fact, the prices of all the metals chosen by Ehrlich had fallen.

In his challenging 1981 book The Ultimate Resource, Simon showed that resource prices had generally decreased over time. The relative price of oil (in terms of other goods) has fallen by perhaps as much as two-thirds between the 1860s and today. During the same period, the price of oil in terms of salaries has decreased by more than 90%.

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...we know the broad interacting factors in oil prices: political uncertainty in the Middle East, increased demand from rapidly developing countries (assuming that their growth is not stopped by their states), and the usual innovation spirit and entrepreneurship of man. We should just make sure that politics interfere as little as possible with the last factor.

Seems to me that by this verse, God (through Moses) is saying that Blessing and Debt are opposites in his eyes. Just another piece of evidence in support of Dave Ramsey's assertion that God does not use debt to bless His people.

Wednesday, August 3, 2005

States are moving to protect private property after the Supreme Court eviscerated the 5th Amendment. I'm glad someone's paying attention. I especially like the Alabama blurb:

In Alabama Wednesday, Gov. Bob Riley will sign a law that prohibits the state, cities and counties from taking private property for retail, office, commercial, industrial or residential development. "We don't like anybody messing with our dogs, our guns, our hunting rights or trying to take property from us," says state Sen. Jack Biddle, a sponsor of the law.